Ulster Bank Northern Ireland Purchasing Managers Index (PMI) Includes analysis of Global, Eurozone, UK, UK Regions, NI & Republic of Ireland economic performance by sector March 2015 Survey Update Issued 13 th April 2015 Richard Ramsey Chief Economist Northern Ireland www.ulstereconomix.com [email protected]Twitter @UB_Economics
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Slide pack , Ulster Bank Northern Ireland PMI, March 2015
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Ulster Bank Northern Ireland Purchasing Managers Index (PMI)
Includes analysis of Global, Eurozone, UK, UK Regions, NI &
Republic of Ireland economic performance by sector
Australia’s services & manufacturing sectors on both sides of the 50 threshold in March
Australia - PMI
30
35
40
45
50
55
60
65
Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
Manufacturing Services No Change
Source: Markit Economics PMIs
Contraction
Expansion
NI posts its 1st month of expansion, albeit marginal, in 4 months but still lags behind the UK & RoI
Private Sector Business Activity - PMIs
30
35
40
45
50
55
60
65
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
NI UK RoI
Source: Markit & Ulster Bank NI PMI50 = threshold between expansion / contraction
Expansion
Contraction
**PMI Surveys Exclude Agriculture & Public Sector**
PMI suggests growth in DFP’s private sector composite index (combines indices for construction, services, agriculture & industrial production) throughout 2014
NI Private Sector Output Index Versus NI PMI
-6-5-4-3-2-1
012345
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1
NICEI Q/Q%
30
35
40
45
50
55
60
65PMI NICEI Left Hand Scale PMI Right Hand Scale
Source: DFP NI Composite Economic Index (NICEI) & Ulster Bank / Markit Economics NI PMI,Q2 2014 is latest data for NICEI.
50 mark is the threshold for expansion / contraction with PMI Expansion
Contraction
2014 was the first year in 7 years that business activity, new orders, employment & export orders all expanded
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
2007 2008 2009 2010 2011 2012 2013 2014
PMI Index
Business Activity New Orders Employment Export Orders ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI
NI’s recovery took hold in H2-13 with all indicators improving in H1-14 but easing in H2-14 & H1-15
NI Private Sector Performance (PMI)
30
35
40
45
50
55
60
65
2006
H220
07H1
2007
H220
08H1
2008
H220
09H1
2009
H220
10H1
2010
H220
11H1
2011
H220
12H1
2012
H220
13H1
2013
H220
14H1
2014
H220
15H1*
PMI Index
Business Activity New Orders Employment Export Orders
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI, * refers to Q1 2015
NI firms reporting simultaneous growth in employment, output and orders for the first time since November
NI Private Sector ActivityMonthly
30
35
40
45
50
55
60
65
70
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
Business Activity New Business Employment
Source: Markit Economics & Ulster Bank NI PMI
ExpansionContraction
UK & RoI continue to report robust rates of orders growth while NI firms post modest rates of expansion
Private Sector New OrdersMonthly
30
35
40
45
50
55
60
65
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Orders increasing
Orders C
ontracting
Backlogs of work continue to grow in the UK & RoI but NI posts a 6th month of contraction as activity slows
Private Sector Backlogs3 month moving average
30
35
40
45
50
55
60
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI PMI
Increasing D
ecreasing
Export orders flat or falling in each of the last 5 months
NI New Export BusinessMonthly
20
30
40
50
60
70
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
New Export Orders No Change
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
PMI signals the fastest rate of jobs growth in 7 yrs in Q2 with the rate of job creation easing sharply & levelling off
NI Employment: PMI v QES**
35
40
45
50
55
60
2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1
PMI Index
-1.5%
-1.3%
-1.0%
-0.8%
-0.5%
-0.3%
0.0%
0.3%
0.5%
0.8%
1.0%Q/Q
PMI Employment Index No Change QES Q/Q
**QES is DFP's official Quarterly Employment Survey of the number of jobs in NI & includes public sector
Discontinuity in QES Series
Job Losses
Job gains
Source: DFP, Ulster Bank & Markit Economics, PMI Index 50.0 denotes threshold between expansion / contraction.
Employment growth eases in March for all 3 economies
Private Sector Employment LevelsMonthly
30
35
40
45
50
55
60
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
NI UK RoI
Source: Markit Economics & Ulster Bank NI
Job Gains
Job Losses
Inflationary pressures remain subdued with output prices still falling
NI Private Sector Profit Squeeze3 Month Moving Average
30
40
50
60
70
80
Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
Output Prices Input Prices No Change
InflationD
eflation
Source: Markit Economics & Ulster Bank NI PMI
Profits squeeze
Price of goods & services
Regional Comparisons
Scotland was the only UK region to see a contraction in output in March
Output / Business ActivityMarch 2015
50 = No change
49.4
50.2
59.658.7
40
45
50
55
60
65
Lon WM Wal Y&H SE UK SW EM NE NW East NI Scot RoI
PMI Index
ExpansionC
ontraction
Source: Markit Economics & Ulster Bank NI PMI
Most of the UK regions & the RoI posted strong rates of growth in Q1 with only NI & Scotland contracting
Output / Business Activity Q1 2015
50 = No change
60.2
49
57.5
40
45
50
55
60
65
Lon WM Wal UK SE Y&H SW NW East EM NE Scot NI RoI
PMI Index
Source: Markit Economics & Ulster Bank NI PMI
ExpansionC
ontraction
The RoI reported the fastest rate of growth in business activity over the last 12 months & Scotland the slowest
Output / Business Activity12 months to March 2015
50 = No change
55.0
58.0
60.4
44
47
50
53
56
59
62
65
Lon NE Wal SE WM East UK Y&H EM NW SW NI Scot RoI
PMI Index
ExpansionC
ontractionSource: Markit Economics & Ulster Bank NI PMI
The RoI posts the fastest rate of employment growth in March while NI records the slowest pace of job creation
Employment LevelsMarch 201550 = No change
51.5
59.1
46
48
50
52
54
56
58
60
62
Y&H WM Lon SW UK East SE EM NW Wal NE Scot NI RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
NI & Scotland post the weakest rates of job creation within the UK over the last 3 months
Employment LevelsQ1 2015
50 = No change
51.3
56.6
51.1
59
46
48
50
52
54
56
58
60
WM Lon East Y&H UK SE NW SW Wal EM NE NI Scot RoI
PMI Index
IncreasingD
ecreasing
Source: Markit Economics & Ulster Bank NI PMI
Scotland, the North East & NI posted the weakest rates of jobs growth over the last year with the RoI the strongest
Employment Levels 12 months to March 2015
50 = No change
56.2
53
58.1
46
48
50
52
54
56
58
60
East Y&H WM Lon UK NW SE EM SW Wal Scot NI NE RoI
PMI Index
IncreasingD
ecreasingSource: Markit Economics & Ulster Bank NI PMI
Sectoral Comparisons
UK manufacturing & services sectors report an acceleration in output growth in March
UK Business Activity / Output - PMIs
20
30
40
50
60
70
Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15
Services Manufacturing Construction
Source: Markit Economics
ExpansionC
ontraction
UK posts strong rates of economic growth between Q1- 13 & Q3-14. Growth eased in Q4 but picks up in Q1-15
UK GDP versus UK Composite PMIUK Composite includes Construction
Rates Charged By Sub-Contractors Availability of Sub-Contractors
Source: Markit Economics & Ulster Bank
IncraesingD
ecreasing
Despite slowdown in construction sector activity, firms remain very optimistic about the year ahead
Future Business Activity Index - PMIs
20
30
40
50
60
70
80
90
100
Mar-00 Mar-03 Mar-06 Mar-09 Mar-12 Mar-15
RoI Future Activity RoI Long-Term Average
Source: Markit Economics
Optim
ismPessim
ism
In 12mths time do you expect overall activity to be higher than now, lower, or the same?
Slide 63
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